Will the David Jones entry into premium groceries be a success?

Posted by AFN Staff Writers on 15th February 2016

Department store David Jones will once again be competing against Australia’s supermarkets with its South African owner Woolworths Holdings signalling its intentions late last week that the chain will be entering the Australian groceries market.


David Jones previously ventured into selling grocery items operating its premium “Foodchain” stores between 2000 – 2003. This venture was closed after it failed to take off and accumulated losses of AU AUD$120 million.


So will things be different for David Jones second time around?


Maybe if it gets a couple of factors right:


Utilising experience 


Things have changed for the retailer since the early 2000s. In 2014, David Jones was acquired by Woolworths Holdings, the South African based retail giant, which has no affiliations with Woolworths Australia, but has strong experience in food retailing itself.


Woolworths Holdings operates one of the largest chains of retail stores in South Africa. It also has a series of food stores, some within its retail department stores and others entirely separate. David Jones’ new investment in Australian groceries will also be led by John Dixon who held an executive position with the UK department chain Marks and Spencer which has found previous success in food and groceries. If he can bring the success of Marks and Spencer to Australia then David Jones may be onto a winner.


Winning over Australia’s increasing foodie culture


There is no doubt Australians are very interested in food, especially premium foods. Since David Jones first attempted to venture into groceries Australians have seen a boom in celebrity chefs and reality cooking shows all promoting cooking and quality eating. If David Jones can appeal to the “foodies” and especially tap into obsessions with healthy eating, things might work out well.


What about Australia’s other premium supermarkets?


Any new offering from David Jones would not be Australia’s only premium supermarket or grocery retailer, it will have competition from the likes of Jones the Grocer and Woolworths Limited’s Thomas Dux, last week, a contributor on Australian Food News expressed the viewpoint that Thomas Dux may be on the way out.


Despite the competition, the premium market is certainly not over-crowded, and David Jones already has a strong-premium positioning it can transfer to any food venture. This could also serve the company well.